Do You Need Long-Term Care Insurance?

Women today have high odds of living well into their 80s or 90s. The average life expectancy of a 65-year-old woman today is about 22 years, according to the Social Security Administration. That means a woman has a 50-percent chance of living past age 87.

Considering that a woman’s life expectancy is lengthening as healthcare improves, odds are also quite high that you will need long-term care at some point in your life. That could mean hiring someone to take care of you at home if you are unable to care for yourself, or it could mean moving to an assisted-living facility or a nursing home for a period of time.

Someone turning 65 today has about a 70-percent chance of needing long-term care at some future point, according to the U.S. Department of Health and Human Services. Women generally need it for an average of 3.7 years.

Unfortunately, the cost of long-term care has been rising: A 2014 study by Genworth Financial found that the median annual cost of a private room in a U.S. assisted-living facility and nursing home reached $42,000 and $86,700, respectively. Those costs rose 1.4 percent and 4.4 percent over 2013, respectively.

The question for many women then becomes: Given the high odds and costs of needing long-term care, should I buy long-term care insurance to protect against the financial risks?

The Basics

Long-term care insurance (LTC) can provide a payout for a full range of long-term care services, including professional in-home care and extended stays in assisted-living facilities and nursing homes. Policies carry various terms, however. Some policies start paying out immediately, while others have a waiting (or “elimination”) period, such as 30 or 90 days, before benefits kick in.

Most long-term care policies provide a set payout per day that depends on the type of care you receive. For example, a policy might pay $50 for every day you receive professional in-home care, $150 for every day in assisted living and $200 for every day spent in a nursing home. Policies also typically carry a maximum benefit amount, such as $300,000, over the life of the policy.

Some policies also come with inflation adjustments built in to ensure that your benefit levels keep up with the costs of care over time.

The Considerations

Given the high and rising cost of extended care, many women use LTC to help protect against the financial risks associated with needing long-term care. One major benefit of this insurance is the peace of mind that comes with knowing that you will have some financial resources available to help pay for long-term care if you need them.

Moreover, you’re paying for that coverage today — when costs are probably lower. Long-term care insurance premiums generally rise the older you are when you first get the policy. For example, a 50-year-old woman will pay lower premiums for LTC coverage over the life of the policy than someone who applies for coverage at age 60.

Of course, when buying any kind of insurance there are considerations. For one, there’s always the chance you won’t need long-term care, meaning you risk spending money on an insurance policy you will never benefit from. Affluent women may want to “self-insure” or use an annuity to cover the potential costs of long-term care. For less-affluent women, a long-term care policy can help them prepare financially for the possibility of needing LTC later in life.

Whatever your personal situation is, it makes sense to talk with your Regions Wealth Advisor. Your advisor can help you evaluate your unique situation and decide whether buying insurance or self-insuring is the right move for you and your family. He or she can also review any existing long-term care policy you might have to help ensure that it fits your needs.

This information is general in nature and is not intended to be legal, tax, or financial advice. Although Regions believes this information to be accurate, it cannot ensure that it will remain up to date. Statements or opinions of individuals referenced herein are their own—not Regions'. Consult an appropriate professional concerning your specific situation and irs.gov for current tax rules. Regions, the Regions logo, and the LifeGreen bike are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.

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